Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our company,” “the company” or “Digital Realty” refer to Digital Realty Trust, Inc., together with its consolidated subsidiaries, including Digital Realty Trust, L.P., our “operating partnership.”
Item 8.01 Other Events
Recent Developments
Through strategic investments, we have expanded our footprint into Latin America, enhanced our data center offerings in strategic and complementary U.S. metropolitan areas, established our colocation and interconnection platform in the U.S. and expanded our colocation and interconnection platform in Europe and Africa, with each transaction enhancing our presence in top-tier locations throughout North America, Europe, Latin America and Africa. In addition, on August 1, 2022, we completed our acquisition of a majority interest in Teraco, the largest and most densely interconnected data center platform in South Africa, with an in-service portfolio of seven state-of-the-art data centers strategically located in the key South African metropolitan areas of Johannesburg, Cape Town and Durban. As of March 31, 2024, our portfolio had approximately 2,500 megawatts of capacity. In addition, we are investing in our portfolio to organically expand our capacity. As of March 31, 2024, we had 437 megawatts of projects underway across multiple metropolitan areas around the world, and 65% percent of this data center activity was pre-leased. In addition, as of March 31, 2024, we estimate that our land and other space held for, or actively under, construction could accommodate approximately 3,000 megawatts of additional development capacity, including more than 1,000 additional megawatts developable on more than 500 acres of land holdings in Northern Virginia. From time to time, we may look to sell individual assets or portfolios that we do not consider to be core to our business and growth strategy.
We believe the estimated stabilized yields on our in-progress construction projects in North America and South America has been increasing over the last several quarters. As of March 31, 2024, we estimate that the stabilized yield on our total 437 megawatts of capacity under construction across the world was approximately 10.6% and the estimated stabilized yield on the 178 megawatts of capacity under construction in North America and South America was approximately 12.3%. We define the estimated stabilized yield on our in-progress construction as the anticipated stabilized net operating income for a certain project as a percentage of the total estimated cost to complete the construction of such project. We calculate the anticipated stabilized net operating income for any given project by subtracting the projects estimated stabilized operating expenses (before interest expense, income taxes (if any) and depreciation and amortization) from its estimated stabilized revenue, which we estimate based on leases signed and other assumptions based on market conditions. No assurance can be given that we will complete any of these projects on the terms currently contemplated, or at all, that the actual cost of any of these projects will not exceed our estimates or that the actual yield achieved by such projects will be consistent with our estimates.
The locations of and improvements to our data centers, the network density, interconnection infrastructure and connectivity-centric customers in certain of our facilities, and our comprehensive product offerings are critical to our customers’ businesses, which we believe results in high occupancy levels, longer average lease terms and customer relationships, as well as lower turnover. In addition, many of our data centers contain significant improvements that have been installed at our customers’ expense. The tenant improvements in our data centers are generally readily adaptable for use by similar customers.
Our data centers are physically secure, network-rich and equipped to meet the power and cooling requirements of smaller footprints up to the most demanding IT applications. Many of our data centers are located on major aggregation points formed by the physical presence of multiple major telecommunications service providers, which reduces our customers’ costs and operational risks and enhances the attractiveness of